Housing lawyers were backing plans for a national deposit scheme to be incorporated into the Housing Bill last week, as a Shelter and Citizens Advice report revealed that more than £20m of deposits were wrongfully held on to each year.
The two groups want to see legislation in the Housing Bill that regulates tenancy deposits and creates a single, national deposit scheme to be operated by an independent third party agency, which would protect deposit money and ensure that any dispute over its return was independently assessed.
“It’s a very sensible idea,” commented Russell Conway, senior partner at London law firm Oliver Fisher, which specialises in landlord-and-tenant problems. “If landlords knew their deposits weren’t being held in their own bank accounts, or by letting agents who have a vested interest in keeping them sweet, but by some independent third party, they might then not want to try it on.”
According to the new report, nearly £800m of tenants’ money is being held without any form of statutory protection, and one in five tenants say they have had all or part of their deposit unreasonably withheld. The average deposit is £510 and there are over two million private tenancies in England.
Conway, a member of the Law Society’s housing law committee, believes the scale of the problem to be huge. He takes at least one call every day from a tenant or a former tenant who has had problems recovering their deposit.
The only form of redress left open to tenants is legal proceedings, which invariably means taking the landlord to the Small Claims Court, as most claims are under £5,000. “In my experience a lot of people will get legal advice, but the vast majority won’t take it further, simply because they don’t have the means and wherewithal to go through what can appear to be a rather unfathomable legal process,” Conway said.
The campaign is backed by the Consumer Association and the Local Government Association, and some 150 MPs have already signed up to an Early Day Motion calling for a mandatory scheme.
“I think it could solve a problem which is a major social ill,” said Conway. “Many landlords just regard the deposit as their 53rd week’s rent.”